The optimism carried the Financial Select Sector SPDR Fund (NYSEARCA:XLF) to a new record closing high of $25.39. The milestone provides a perfect excuse to take a fresh look at bank stocks. Turns out GS stock — one of the most prestigious of the bunch — is itching for a breakout, making it one of my top picks for the week ahead.

To set the stage, let’s first survey XLF.

The Financial Sector

The price trend for financials has been firing on all cylinders since June, both on an absolute and a relative basis. The past four upswings have transpired on above-average volume suggesting big buyers are entering the fray. Like all rock star uptrends, XLF has been climbing above rising 20-day, 50-day, and 200-day moving averages.

Although Friday’s early-morning pop faded by day’s end, the fund still was able to close above its late-February high.

Financials began outperforming the S&P 500 in June and haven’t looked back since. Performance chasers are always on the lookout for relative strength as it’s a hallmark of leading stocks. Take note of the uptrending Comparative Relative Strength (CRS) indicator in the accompanying chart.

Finally, at the risk of being redundant, I’ve added the Relative Strength Index (RSI) indicator as well. This pup has been trading above 50 since June, which confirms the trend of XLF is firmly in bullish territory.

Here’s the bottom line. It’s game on for bull trades in the financial sector.

Goldman Sachs’ Chart

With the recent strength in banks, you would think GS stock would be basking in the profits. But it hasn’t. It has been dead money for the past five months. Year-to-date, Goldman is actually down 6.5%. What a dud!

And it’s not like other investment banks aren’t getting in on the action. Morgan Stanley (NYSE:MS) just tagged a new nine-year high on Friday.

So if you’re seeking the best of breed (at least from a price performance perspective), then GS isn’t your stock. But I still think it’s worthy of your attention.

My rationale is rotation. If the financial sector keeps chugging along, capital eventually will seek the underperformers, and a game of catch-up will ensue. That is what I’m banking on with Goldman shares. And given Friday’s stark outperformance, I suspect the game may already be afoot.

With its recent pop, the stock has climbed back above all its major moving averages and is currently testing a major resistance level. The $230 zone has acted as impenetrable resistance ever since the stock broke down in mid-March. What’s particularly attractive is the massive price void looming overhead. Once $230 is breached, GS has little resistance until around $245, which means we could see some swift follow through.

The Trade on GS Stock

Goldman options are dirt-cheap these days. While I’d like to sell out-of-the-money puts, the implied volatility rank of 6% simply doesn’t leave enough meat on the bone. Plus, a higher-reward trade will deliver more bang for the buck if the stock runs following the breakout.

Buy the Oct $230/$240 bull call spread for $4.00. The max loss is limited to the initial cost and will be forfeited if GS sits below $230 at expiration. To minimize the damage, I suggest exiting on a break below the $217 support level.

The max gain is $6 and will be captured if Goldman can rise above $240 by expiration. By risking $4 to obtain $6, this spread offers a potential 150% return on investment.

As of this writing, Tyler Craig held bullish positions in XLF. Want to learn how to master the art of option selling for high-probability cash flow? Check out Tyler’s recently released video series through Tackle Trading on how to systematically sell iron condors for monthly income.